Stellantis, a major car manufacturer in Italy, faced a significant drop in production during the first half of the year, down 25% compared to last year. The decline was especially sharp at plants like Melfi and Mirafiori, where production fell by as much as 63%. Delays in government subsidies for electric vehicles worsened the situation, impacting demand for cars, including the popular Fiat 500 electric model. This setback comes amidst clashes between Stellantis and the Italian government over job cuts and moving production out of Italy. The company’s CEO aims to increase Italian car production to 1 million vehicles by 2030, but achieving this goal looks increasingly challenging given the current struggles.
Stellantis NV’s automobile output in Italy fell 36% in the first half, as a delay in the government’s anticipated electric-vehicle subsidies compounded a slowdown in EV demand, according to an auto workers union.
The overall output of cars and light commercial vehicles in the first six months was 303,510, a 25% decrease from the previous year, according to Ferdinando Uliano, secretary general of the Fim-Cisl union, in a statement released Monday, reports Bloomberg.
If the current trend continues, Stellantis will build approximately 500,000 vehicles in Italy this year, significantly below the 751,000 expected in 2023, according to the union. The impact is most pronounced at the company’s Melfi and Mirafiori factories, with the latter experiencing a 63% drop in first-half production, according to Uliano.
The statistics are a blow to Prime Minister Giorgia Meloni’s plans to increase auto production in the country to 1 million automobiles by 2030. For months, the government argued with Stellantis about its plans to slash jobs and relocate production to lower-cost locations outside of Italy.
The tensions compelled Stellantis CEO Carlos Tavares to rename an Alfa Romeo model manufactured in Poland and remove Italian flags from Fiat Topolino vehicles constructed in Morocco.
Mutual Objective
Tavares stated in February that his company supports the goal of 1 million Italian-made vehicles by 2030, or even sooner if possible. Still, the CEO has been restructuring Stellantis’ manufacturing footprint with strict cost cuts in Italy, France, and the United States, at a time when governments are attempting to defend local businesses threatened by the shift to electric vehicles. Tavares also criticized Meloni’s efforts to bring a Chinese vehicle manufacturer to Italy to compensate for lost Stellantis production.
“We all agree on the goal to increase production but we must establish implementation times in detail,” Fim-Cisl’s Uliano said in a statement, requesting a meeting with the administration. The target of “1 million vehicles means doubling current production, given the negative data from the first half, we want concrete answers.”
Production at the Melfi plant in southern Italy fell 58% in the first half, according to the union, while work at Mirafiori, where the electric Fiat 500 is manufactured, will be halted from July 15 to August 25, according to Fiom-Cgil, another union representing Italian auto workers.
A Stellantis spokesperson did not immediately respond to a request for comment.
Stellantis Chief Financial Officer Natalie Knight warned in April that declining demand in Europe will continue to erode margins before rebounding in the second half of the year.
The carmaker must demonstrate “flawless execution in the second half, and management will no longer be able to draw solely on the cost-cutting theme, which is clearly needed but likely insufficient,” Oddo BHF analyst Michael Foundoukidis wrote in a note on Monday, trimming estimates for the company and lowering his price target on the stock to €25 from €30. Stellantis’ shares were scarcely changed in Milan afternoon trading on Monday.
Last month, GreatGameIndia reported that the European Commission declared on Wednesday that it would impose tariffs as high as 48% on Chinese electric vehicles starting early next month.
